MultiMedia by Stephen M. Peters© 2002 South-Western Strategic Planning and Strategic Management

MultiMedia by Stephen M. Peters© 2002 South-Western Strategic Management Top management’s responsibility. Defines the firm’s position. Formulates strategies. Guides the execution of long-term organizational functions. Helps position the organization to achieve a superior competitive fit. Top management’s responsibility. Defines the firm’s position. Formulates strategies. Guides the execution of long-term organizational functions. Helps position the organization to achieve a superior competitive fit.

MultiMedia by Stephen M. Peters© 2002 South-Western Strategic Planning Questions What is the organization’s position in the marketplace? What does the organization want its position to be? What trends and changes are occurring in the marketplace? What are the best alternatives to help the organization achieve its goals?

MultiMedia by Stephen M. Peters© 2002 South-Western 2. Resource Deployment 2. Resource Deployment 1. Scope 3. Distinctive Competitive Advantage 3. Distinctive Competitive Advantage 4. Synergy Four Elements of Strategy Development

MultiMedia by Stephen M. Peters© 2002 South-Western Scope of a Strategy Specifies The position or size the firm wants to achieve. The geographical markets it wants to compete in. The products and services it will sell.

MultiMedia by Stephen M. Peters© 2002 South-Western Distinctive Competitive Advantage —Four Points — 1. Unique position in relationship to its competition2. A firm’s core competencies3. What the firm knows best4. What the firm does best

MultiMedia by Stephen M. Peters© 2002 South-Western Characteristics of Successful Strategic Managers 1.Well informed 2.Skill at focusing their time and energy 3.Good at building consensus 4.Good at creating contingency plans 5.Accomplished at simplifying the process

MultiMedia by Stephen M. Peters© 2002 South-Western Strategy Formulation Planning and decision making that goes into developing the company’s strategic goals. Includes: – Assessing the environments. – Analyzing core competencies. – Creating goals and plans.

MultiMedia by Stephen M. Peters© 2002 South-Western Strategy Implementation: Executing the Strategic Plan Includes Creating Teams Focusing on Processes Rather than Functions Offering Incentives Adapting New Technologies Facilitating Communications Making Structural Changes

MultiMedia by Stephen M. Peters© 2002 South-Western The Purpose of Corporate-Level Strategy to Answer 1. What business are we in?2. What business should we be in?

MultiMedia by Stephen M. Peters© 2002 South-Western Business-Level Strategy Questions 1. How do we compete? 2. How much will be spent on activities such as advertising and R & D? 3. What equipment and facilities will be needed? 4. Should we expand or contract existing product lines?

MultiMedia by Stephen M. Peters© 2002 South-Western Functional-Level Strategy Major Activities Human Resource ManagementResearch and DevelopmentMarketingFinanceProduction

MultiMedia by Stephen M. Peters© 2002 South-Western Strategic Planners Should Consider The Following  Management Factors  Marketing Factors  Production Factors  Research Factors  Human Resource Factors  Financial Factors

MultiMedia by Stephen M. Peters© 2002 South-Western SWOT Analysis Chart

MultiMedia by Stephen M. Peters© 2002 South-Western SWOT Analysis Chart

MultiMedia by Stephen M. Peters© 2002 South-Western External Threats and Opportunities Factors of new competitors entering the marketplace. of substitute products. resulting from entering new marketplaces. created by strategy changes of major competitors. resulting from the potential actions and profitability of customers. created by the actions of suppliers. resulting from new (or abandoned) government regulations. created by new technology. from changes in the state of the economy. The threat or opportunity:

MultiMedia by Stephen M. Peters© 2002 South-Western Craig Weatherup’s Three Leadership Criteria Idea leadership “the ability to find, create, borrow, steal, or reshape ideas, especially big ideas.” People leaders “to mobilize the troops and energize the organization.” Capability leadership refers to “a manager’s ability to build and institutionalize the capabilities of people.”

MultiMedia by Stephen M. Peters© 2002 South-Western Five Basic Grand Strategies 1.Growth Strategy – is adopted when the organization wants to create high levels of growth in one or more of its areas of operations. 2.Integration Strategy – is adopted with the business sees a need to subsidize its supply lines or reduce costs. to consolidate competition. 3.Diversification Strategy – the company wants to move into new products or markets. 4.Retrenchment Strategy – used to reduce the size or scope of a firm’s activities by cutting back or eliminating entire businesses. 5.Stability Strategy – the organization wants to remain the same. 1.Growth Strategy – is adopted when the organization wants to create high levels of growth in one or more of its areas of operations. 2.Integration Strategy – is adopted with the business sees a need to subsidize its supply lines or reduce costs. to consolidate competition. 3.Diversification Strategy – the company wants to move into new products or markets. 4.Retrenchment Strategy – used to reduce the size or scope of a firm’s activities by cutting back or eliminating entire businesses. 5.Stability Strategy – the organization wants to remain the same.

MultiMedia by Stephen M. Peters© 2002 South-Western Integration Strategies Vertical Integration –Gaining ownership of resources, suppliers, or distribution systems that relate to a company’s business. Horizontal Integration –A strategy to consolidate competition by acquiring similar products or services.

MultiMedia by Stephen M. Peters© 2002 South-Western Portfolio Strategy  Determines the mix of business units and product lines.  Begins by identifying strategic business units (SBUs).

MultiMedia by Stephen M. Peters© 2002 South-Western SBUs  Autonomous businesses with their own identities.  Operate within the framework of the organization.  Originated at General Electric in the 1970s.  Have their own product lines, markets, and competitors.

MultiMedia by Stephen M. Peters© 2002 South-Western A BCG Matrix

MultiMedia by Stephen M. Peters© 2002 South-Western Business-Level Strategy Strategy managers formulate for each SBU. Strategies that can be grouped as either adaptive strategies or competitive strategies.

MultiMedia by Stephen M. Peters© 2002 South-Western The Four Adaptive Strategies Prospector Defender Analyzer 1. Reactor

MultiMedia by Stephen M. Peters© 2002 South-Western Marketing Strategy Involves PricingPromotionDistribution Product or service mix of the organization